What is Foreign Direct Investment
Foreign Direct Investment (FDI) refers to an investment made by a company or individual from one country into business interests located in another country. FDI typically involves establishing business operations or acquiring business assets in the foreign country, such as ownership or controlling interest in a foreign company. This kind of investment is distinct from portfolio investment, which involves purchasing securities like stocks and bonds in a foreign country but does not involve taking control or having direct influence over business decisions.
FDI can take several forms, including:
- Greenfield Investment: Establishing new operations in a foreign country from scratch, such as building a new factory or office.
- Mergers and Acquisitions: Acquiring or merging with an existing foreign company.
- Joint Ventures: Partnering with a foreign company to establish a new business entity.
- Reinvestment: Investing in an existing foreign enterprise to expand operations.
FDI is often seen as a key driver of economic growth, providing a host country with access to capital, technology, and management expertise, while also offering the investing company new markets and opportunities.
